If a client fires the lawyer early, does the lawyer have to refund the unused part of a non-refundable retainer?

Plain-English summary

An educated business-owner client retained an attorney in a domestic relations case and paid a $1,000 retainer under a written contract providing that the retainer was non-refundable and would be billed against at the attorney's hourly rate. The attorney conferred with the client and prepared pleadings, but could not reach the client to verify them, so they were never filed. The client then ended the matter and demanded a refund, conceding only that the attorney could keep a small pro-rata fee for time actually spent.

The committee concluded that the attorney was not ethically required to refund the unused portion. The critical fact was that the parties had agreed the money was a non-refundable retainer, and Rule 1.16(d) expressly permits an attorney to retain a reasonable non-refundable retainer after the representation ends. The retainer therefore could be kept in full, provided the $1,000 was reasonable. On reasonableness, the committee pointed to the comment to Rule 1.5 and the eight factors in Rule 1.5(a), noting the list is not exclusive, that reasonableness is a fact-specific and partly subjective inquiry, and that every attorney must analyze the reasonableness of each fee charged.

Currency note

This opinion was issued in 1993, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Does a lawyer have to refund an unused non-refundable retainer when fired early?

A: Not necessarily. The committee concluded that Rule 1.16(d) permits an attorney to retain a reasonable non-refundable retainer after the representation ends, so the unused portion may be kept if the retainer was reasonable.

Q: What made the retainer keepable here?

A: The parties had agreed in writing that the money was a non-refundable retainer, which the committee called the critical fact, and the retainer had to be reasonable in amount.

Q: How is the retainer's reasonableness judged?

A: By the eight factors in Rule 1.5(a) referenced in the comment to Rule 1.5. The committee stressed the list is not exclusive and that reasonableness is a fact-specific, partly subjective inquiry the attorney must make for each fee.

Background and rules framework

The opinion applied Rule 1.16(d) (declining or terminating representation) and Rule 1.5 (fees), which correspond to like-numbered Model Rules. Rule 1.16(d) addresses what a lawyer may retain on termination, and Rule 1.5(a) supplies the factors for judging whether a fee is reasonable.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.16(d) / Model Rule 1.16(d): permits an attorney to retain a reasonable non-refundable retainer after termination of the representation.
• South Carolina RPC 1.5(a) / Model Rule 1.5(a): a fee must be reasonable, judged by the eight enumerated factors and others that may be relevant.

See also

• SC Bar Ethics Op. 02-07: Refunding a Third-Party-Paid Fee
• SC Bar Ethics Op. 93-13: Contingent Fee for Third-Party Parents
• SC Bar Ethics Op. 93-34: Fees on a Subrogated Recovery

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-93-12/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 93-12

A client, who operates his own business and is educated, retains an attorney in a domestic relations case and pays a $1,000 retainer fee. The attorney and client sign a contract which provides, among other things, that the retainer fee is non-refundable and sets forth the billing rate of the attorney which is to be charged against the retainer until it is exhausted at which time subsequent bills would be sent to the client at periodic intervals with payment due upon receipt. The attorney confers with client and prepares pleadings on behalf of the client. In this particular case it was appropriate for the attorney to verify the pleadings prior to filing; however, the attorney was unable to contact the client and the pleadings were never verified or filed. Several weeks later the client advised the attorney that he did not wish to pursue the matter and demanded a refund. The client was willing for the attorney to retain a pro-rata fee based upon the actual time expended. This fee amounted to a small fraction of the total retainer fee based upon the hourly rate.

Issue:
Is the attorney ethically obligated to return the unused portion of the non-refundable retainer fee?

Summary:
If the non-refundable retainer fee is reasonable, then the attorney may retain any unused portion of the non-refundable retainer after the termination of representation.

Opinion:
A critical fact is that the parties agreed that the money paid to the lawyer was a non-refundable retainer. Rule 1.16(d) expressly permits an attorney to retain a reasonable non- refundable retainer after the termination of a representation. Therefore, provided the $1,000 is a reasonable amount, the attorney may retain the unused portion of the nonrefundable retainer.

The comment to S.C. Rule 1.5 states that a non-refundable retainer may be retained if it is reasonable under the factors set forth in Rule 1.5(a). These factors are:

1. The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal services properly; 2. The likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; 3. The fee customarily charged in the locality for similar legal services; 4. The amount involved and the results obtained; 5. The time limitations imposed by the client or by the circumstances; 6. The nature and length of the professional relationship with the client; 7. The experience, reputation, and ability of the lawyer or lawyers performing the services; 8. Whether the fee is fixed or contingent.

The factors set out herein above are not necessarily inclusive. Other factors may be relevant in determining the reasonableness of an attorney's fees. A determination of the reasonableness of attorney fees is, by necessity, a very fact specific inquiry. In addition, many of the above factors are subjective in nature and do not lend themselves to a definite answer. Every attorney is under an ethical obligation to charge reasonable fees. Thus, every attorney must make his or her own analysis of the reasonableness of every fee charged.